Comment: How embracing data and technology can make a Merry Christmas for retailers

It goes without saying that Christmas is a pivotal moment in UK retailers’ calendars, with many businesses expecting to make up to half of their annual profit over the three months of the festive season. This year, consumer confidence levels suggest healthy sales on the high street with Accenture’s annual Holiday Shopping research showing 85% of customers expect to spend the same or more this festive period compared with last year. While the vote to leave the European Union was predicted to spell uncertainty for UK retailers, 57% of shoppers questioned feel that their spending habits have been entirely unaffected.

However, despite positive predictions for the coming weeks, the UK high street needs to be prepared for an uncertain and challenging climate. With consumers ruthlessly searching for the lowest price and waning brand loyalty, retailers need to adopt cutting edge digital strategies if they are to stay ahead of their competitors. Amazon, for example, is playing a pivotal role in consumer purchase decisions – it’s the first port of call for eight out of 10 shoppers before they part with their cash – so brands without a robust online presence will struggle to stay front of mind for consumers as they browse for products.

But that doesn’t mean the end of investing in bricks and mortar. Boundaries have blurred between online and offline channels; we’re increasingly seeing consumers ‘webrooming’ or browsing products online at their leisure, before coming in to store to make their purchases.

Now more than ever, retailers need to ensure consumers are guided seamlessly from one channel to another, encouraging further spend at every opportunity. Clever discounting is a core part of this - 74% of respondents in our survey said they will purchase items from different stores or sites to get the lowest price, so there is a real risk to retailers that they could lose shoppers to a competitor offering a better deal.

So, how can retailers use data and technology to maximise profits in this promotion-driven market?

Leverage data effectively to deliver personalised offers. It’s no surprise that our survey found 18-24 year olds are the demographic most likely to share personal information in order to get personalised offers, given they have grown up in a digital age. Where this insight is available, it should be used to serve tailored content to a targeted customer pool, to effectively convert potential sales into revenue.

Offer the right discounts. Retailers need to be prepared to deliver competitive reductions and remain flexible to ensure they don’t get undercut by competitors. On average, a 30% discount will persuade customers to purchase an item. In addition, nearly a quarter of the items returned last year were rejected by consumers because they could find it cheaper elsewhere, highlighting the need for retailers to keep abreast of the wider market when approaching discounting.

Utilise social media channels for millennials. Three quarters (74%) of 18-24 year olds are influenced by social media in their purchasing decisions. Brands that effectively use influencers and ambassadors to engage with this demographic are reaping the rewards. By growing their social media following and delivering relevant and engaging content, retailers can drive traffic to their main site. Increasingly, social platforms are also opening up new direct commerce routes to consumers, providing another way to capture interest and convert to sales. For example, EE partnered with popular YouTubers Dan and Phil to create a bespoke SIM-only package for new customers. The YouTube clip has over 4.5million views and each of these has been served to a specific audience.

Build a solid multichannel strategy. Retailers cannot maintain the traditional separation between eCommerce platforms and physical stores. Three quarters of respondents in our survey plan to adopt ‘showrooming’ this year – the trend to check out an item online and then buy in-store. This gives retailers increased opportunities to drive sales as they are now able to engage with consumers at multiple touch points.

The news consumers are now more bargain hungry should not be viewed negatively. Indeed, half of customers can be enticed by promotions to shop in a store they haven’t shopped at in the past year. Retailers should see this as an opportunity, finding profitable ways to offer discounting as route to increasing online traffic and store footfall, before turning dormant customers into new sources of revenue.

Provided retailers have a clear strategy and the technology infrastructure to provide customers with a seamless online and offline experience, this Christmas should be seen as an opportunity for growth in otherwise uncertain times.

As we enter another year, IGD looks at the five key trends that are set to shape the global food and grocery industry in 2018. What initiatives will retailers and manufacturers introduce to address these? Toby Pickard, senior innovations and trends analyst at IGD, explores.